Monday, May 17, 2010

Bloomberg's Trickle Downer Policies

Adam Lisberg has an interesting look at something that we have been commenting on-the questionable, an unexamined, economic development spending being done by the Bloomberg administration: "Mayor Bloomberg has a trickle-down theory of New York's economy: Spend money to make money, and make sure the people at the top have money to spend. He believes in generating jobs through big projects like rebuilding Coney Island and Willets Point - subsidizing them with tax breaks and public money if necessary."

But some folks-and Comptroller Liu and the CBC are in this category-don't think that we're using money in the best way we could: "Call it the trickle-up theory. "If nobody can show that trickle-down theory works," said Controller John Liu, "we should get rid of it." The conservative Citizens Budget Commission slammed Bloomberg's $2 billion third-term economic development plan, saying there's no evidence it generates new business."

Lisberg, however, glides over the public expenditure issue; and as far as Willets Point is concerned, that is a gap that needs to be further explained. Because as far as that development is concerned, not only is the city looking to lay out over $billion in public money in order to evict businesses and build ramps to nowhere, it is at the same time wiping out a productive engine of economic activity-as Professor Angotti has made abundantly clear.

Writing in the Gotham Gazette, Angotti made this key point: "Here come the marshals again! After evicting 23 businesses in the Bronx Terminal Market to make way for a development deal with the Related Company, City Hall now wants to get rid of ten times that number in a Queens district. The city plans to use its power of eminent domain to foster what it calls economic development in the area around Willets Point. But it could instead mean economic disaster to the long-established business community that would be broken up and scattered. And while it proposes a multi-billion dollar project that would make Willets Point a “regional destination,” possibly with a hotel, convention center and retail space, the city’s planners appear to have little appreciation for businesses that already draw customers from all over the region."

What are we talking about? Angotti again: "While the Economic Development Corporation claims there are 80 businesses in this 48-acre area, a recent survey I conducted through the Hunter College Center for Community Planning & Development instead found 225 businesses that provide an estimated 1,300 jobs."

Of course, EDC isn't interested in job preservation when it can reach for glam-and Willets Point is nothing, if it isn't déclassé: "One Saturday last fall, along with a class of Hunter College students, I walked every block of Willets Point with Joe Ardezzone, a member of the Willets Point Business Association and life-long resident of the area (in fact, the only resident). We saw a thriving though sometimes chaotic and noisy business district...What we saw on the ground was the kind of bustling business district that economic development experts across the country keep trying to re-create in giant development schemes, often with little success. The many specialized auto repair shops in Willets Point both compete and cooperate with one another, and the links between them make for a cooperative business community offering a wide array of services."

So, just as it did at the BTM, EDC is on a crusade to destroy scruffier minority and immigrant businesses-in order to replace them with those higher and better uses that can employ the current immigrant Latino shop owner as a busboy or a door man. All in the name of trickle down.

And, as Jim Dwyer pointed out in the NY Times yesterday, EDC is not only using scarce funds to try to eject small property owners, it is also using public dollars to keep a lot of firms in the city that would probably stay even absent the government vigorish-as we pointed out about the IDA funding for Manhattan Beer's warehouse in the Bronx (the company is only the richest beer distributor in the country).

What we need to understand here is that the Bloombergistas have little feel for job development that doesn't involve massive public outlays and tax breaks for the well-connected. That the administration, in the midst of the current recession could be looking to spend $400 million on buying out property owners who not only employ 1300 workers, but want to stay where they are, says all you need to know about mayoral priorities.

But that doesn't mean that we agree with the critique from the left: "Councilman Brad Lander (D-Brooklyn) said Bloomberg doesn't seem to worry about why so few New Yorkers are at the top of the tax bracket and so many are at the bottom. If Bloomberg really wants to grow jobs, Lander said, he would reverse one of his proposed budget cuts: Saving $4 million by eliminating 737 low-wage Parks Department training jobs for people on welfare just entering the workforce. "It seems to me that's one of the areas where you'd want to expand instead of cutting back," Lander said. "I'd rather see us use more of our economic development resources in projects that more directly create jobs."

Lander is right to chide the mayor-and we agree that we should use resources in a way that, "more directly creates jobs." But using tax money to create a public sector job, in our view, is the wrong approach. Tax cuts for small business-along with the regulatory reform that Lander has championed-will be a job generator. And those parks department jobs will have a source of funding from the increased economic activity that the tax cuts foster. But, even better, some of those park workers might find their way into the private sector, working in jobs that promise advancement and, perhaps even, a store or business of their own somewhere down the road.

Now that's the kind of trickle up policy that we could all get behind. It is certainly no time for those expensive grand schemes that only serve to promote the image of the leader; while, at the same time, crushing the entrepreneurial little guys under the weight of the government's boot.